RIYADH (AFP/Reuters) - Washington could use its aid as a lever to push Israel into a two-state settlement with the Palestinians, Saudi Foreign Minister Prince Saud al-Faisal said in an interview published on Saturday. The US has the means to persuade the Israelis to work for a peaceful settlement, Saud told Newsweek magazine. It needs to tell them that if it is going to continue to help them, they must be reasonable and make reasonable concessions, he said. Asked if Washington should cut off aid to Israel, Saud replied: Why not? If you give aid to someone and they indiscriminately occupy other peoples lands, you bear some responsibility. The interview was conducted on Friday, one day after US President Barack Obamas landmark address to the Muslim world in Cairo. Saud praised Obamas sincerity and his calling Israels expansion of West Bank settlements as not legitimate, but said the speech has yet to be translated into actions. And he fended off Washingtons call for Arab states to make diplomatic overtures to Israel to get new peace negotiations off the ground. We dont have anything to offer Israel except normalisation, and if we put that before the return of Arab land we are giving away the only chip in the hands of Arab countries, Saud said. Meanwhile, a 21-year-old Palestinian was killed and another wounded in a Gaza Strip explosion apparently caused by unexploded munition, witnesses and medics said. Witnesses said Tamer al-Daghma was killed by the blast when he stumbled upon an unknown object near his home outside the southern town of Khan Yunis. Muawiya Hassanein, the head of Gaza emergency services, confirmed receiving the body. In a separate incident on Saturday, a 22-year-old Palestinian was moderately wounded when Israeli warships fired shots at fishing boats near the southern town of Rafah, according to medics and witnesses. The Hamas movement protested the killing of its activists by Palestinian forces in the West Bank as its own Gaza-based security forces launched a new campaign of arrests. Palestinian President Mahmoud Abbas faction accused Hamas of arresting some 150 Fatah activists in Gaza, in apparent retaliation for raids that killed four Hamas men in the West Bank this week. Fahmi al-Zarir, a spokesman for Western-backed Fatah in the occupied West Bank, said Hamas had made the arrests since Friday. He said some men were being held in schools and hotels in the Gaza Strip. Hamas officials declined any comment, but a statement posted on Hamas Interior Ministry website said some Palestinians loyal to Prime Minister Salam Fayyad, a Fatah-backed leader, were arrested as suspected informers for Israel. Around 2,000 women Hamas supporters protested against President Abbas after violent clashes between his police and Hamas this week. No to Abbas, No to Fayyad, the women in Gaza City chanted, referring to Western-backed PM Fayyad who has launched a security crackdown in the Israeli-occupied West Bank over the past several months. The women waved green Hamas flags and held signs reading Abbas security forces are the bodyguards of the Zionists and No dialogue with arrests in the West Bank. Two Hamas members and a Palestinian policeman were killed in a shootout on Thursday in the West Bank town of Qalqilya, and six people were killed in a similar gunbattle there earlier in the week. An investigation by the Al-Haq human rights organisation published on Thursday said Hamas opened fire first on both occasions. But senior Hamas leader Ahmed Bahar accused Abbas and Fayyad of treason for allegedly cooperating with Israel against the Islamist movement.